Kinds of Property Values

5 Oct

Kinds of Property Values

Property evaluation is at the core of the real estate business and is essential for investors, brokers and property owners to conduct business. Property appraisers utilize different methods to provide estimates, which vary depending on the purpose of the valuation. Property investors need to have a very clear comprehension of the principles of valuation and which kind of appraisal is most suitable for every transaction.

Estimated Sales Value

The estimated sale value of a property is based on the sale price of comparable properties in precisely the same area in the last 3 decades. As stated by the Finance Department of New York City, this is actually the property value kind most often used for small residential properties.

Assessment Value

The assessment value of a property is used to calculate the property taxes a homeowner should pay. It’s calculated by multiplying the market value of a house –appraised by a government appraiser–from the assessment ratio important in the property’s jurisdiction.

Liquidation Worth

The liquidation value of a property is the value you would expect to get if you were forced to sell it quickly at a low-demand market. As stated by the U.S. Small Business Administration, this value is 20 percent less than its retail price.

Investment Value

The investment value of a property is based on the income it may create during its useful life. This value can be used to rapidly gauge the value of an investment, but should only be used in conjunction with other methods, as it does not take into account significant factors such as the increase and decline of likely income. This value is obtained by dividing the net yearly income of a property by its own capitalization rate. Although there are different methods to calculate the capitalization rate of a property, the overall idea is to divide the net yearly income it generates by the property’s current price.

See related